Life insurers can launch products sans Irdai nod
The Insurance Regulatory and Development Authority of India (Irdai) has expanded the scope of ‘use & file procedure’ to most of the life insurance products, barring individual savings, individual pensions, and annuity products. This means life insurance companies can launch these products without prior approval of the insurance regulator.
Currently, all life insurance products and riders require Irdai’s prior approval before launch but some modifications are allowed to be carried out through “use & file” procedure.
The move is in line with the reform agenda of Irdai’s new Chairman Debashish Panda. In an interaction with industry players in early April, Panda had highlighted that one of the much-needed changes Irdai intends to bring in includes revamping the product certification process wherein the players will be able to follow the system of “use and file” rather than “file and use”.
“In order to facilitate the life insurance industry to respond faster to the emerging market needs, in terms of designing and pricing of insurance products and to promote ease of doing business, it is decided to expand the scope of “Use & File” procedure for life insurance products,” Irdai said in a circular on Friday.
According to Irdai, when the industry was at a nascent stage, it made sense to get the regulator’s prior approval before launching a product. However, now that the industry has matured, the insurers should be allowed to file products without prior approval.
“The life insurance industry is expected to use this opportunity to respond faster to the emerging market needs, in terms of designing and pricing of insurance products resulting in more choices for the policyholders, which will further help in increasing the insurance penetration in India,” the regulator said.
“The Irdai has allowed some products, such as term, individual unit-linked, and health products, to be filed under the ‘use & file’ procedure compared to the current norm where every product has to go through an approval process. This will certainly cut down the time taken to launch products. On an average, it takes a few months to get a product approved from the regulator,” said Srinivasan Parthasarathy, chief actuary,
HDFC Life.
Rushabh Gandhi, deputy CEO of Indiafirst Life Insurance, said: “Currently, on the individual side, only pure protection and select-linked policies are within scope. With time, we are confident that the regulator will extend the scope to individual par and non-par savings plans,” Gandhi said.
“I believe this will provide insurers with a lot more flexibility and agility when it comes to introducing newer products to the market. However, the onus will be on the insurers to be more responsible and judicious while launching new products and do proper due diligence,” said Vignesh Shahane, MD and CEO, Ageas Federal Life Insurance.